The app industry is projected to hit $407.31 billion by 2026, with Apple approving over 1000 new apps every single day. In our app developmentdiscovery sessions, we’re always being asked how businesses can make money from their app idea.
Our answer is always the same – there are lots of ways to make money, the trick is finding the right one for you and your market. So, let’s dive into the top three monetisation strategies to determine what’s right for you.
1. Subscriptions, or pay-to-play models.
By far the most common strategy is users paying for access to your app. The most common technique is also known as a freemium model. This involves implementing a free trial period, followed by charging a recurring subscription fee for the user to continue to have access.
A similar model also exists, where certain basic features are available with a free account and the user is prompted to take a subscription, or pay a one-off fee to access the premium features.
Whilst this is the easiest way to monetise, the key here is that your app must either provide continued value to your users, or provide some reason they will be happy to keep using your app and paying.
Both Apple and Google play stores have very strict terms on what they will allow for recurring subscription content, so before you even start, make sure you do your due diligence by reading the app store guidelines.
2. Selling Products
If you’re on the bus or train on the way home from work, just take a look around and see what over 80% of the people are doing. They’re glued to their devices. Selling your products in an app, as opposed to just on your desktop accessible website, makes purchases quick and easy for your customers. Within 1-2 clicks, you can get them from adding to cart to checking out with very little friction.
As an alternative, if you don’t have products of your own, perhaps partnering with a third party service that allows you to sell their products and you take a commission, is not a bad option either.
3. Advertising
Advertising is one of the easiest and cheapest ways for you to make money from apps. Advertising in an app is where you’re paid according to the number of clicks on ads in your app. It is usually fairly easy to implement if you work with a third-party ad network like Google Adsense.
Your goal here is to build an app that people love to use, because ads are only as effective as how many people actually see and click on them.
How Much Money can you Make from Apps?
According to recent statistics, the top 25% of iOS developers, and 16% of Android App Developers, make up to $5000 on average each month. The majority of the top apps use a ‘free to download’ model with in-app purchasing, subscription or advertising monetisation models.
Looked at from another position, this also means that around 20% of the applications on the market are actually making good recurring money, leaving 75-80% of apps underperforming.
So, why would someone want to build an app that made no money week to week? There are two very good reasons.
Valuation first, cash later
It took Facebook five years to make any money from its product, but now it’s worth around $430 billion. This strategy focuses on building an amazing product that people love and use every day, and fund it through investment, until it reaches the point where it’s ready to monetise.
A companion to an existing product
The goal of these businesses is not to make money from the app, but to increase consumption of their product. Think here about Dropbox’s app, or perhaps Hubspot’s CRM app.
Whichever way you choose to make money from your app, start with creating a valuable product first, one that people will love and want to use everyday. When you start by giving value first, it becomes very easy to monetise, as opposed to the other way around.
Ready to start your journey towards an app that people love to use? Get in touch with our team at Spring Digital to understand the best strategies for your app.
